Depositors to get Rs 5 lakh insurance within 90 days: Nirmala Sitharaman
New Delhi, July 28: To provide relief to depositors, Union Cabinet on Wednesday cleared the amendments in Deposit Insurance and Credit Guarantee Corporation Act, 1961, (DICGC Act).
Now as the DICGC bill has been passed, depositors of troubled lenders can retrieve an amount up to Rs. 5 lakh from their bank deposit accounts within 90 days, Union Minister Anurag Thakur said.
"This decision will give relief to depositors whose banks are already under moratorium. We will be nearly covering 98.3 percent of all depositors," Nirmala Sitharaman said, adding that the bill will be tabled in Parliament in this session itself.
Last year, the government raised insurance cover on deposit five-folds to Rs 5 lakh to provide support to depositors of ailing lenders like Punjab and Maharashtra Co-operative (PMC) Bank.
Following the collapse of PMC Bank, Yes Bank and Lakshmi Vilas Bank too came under stress, leading to restructuring by the regulator and the government.
The amendment to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961 is the budget announcement made by the Finance Minister.
The Bill is expected to be introduced in the current monsoon session, Finance Minister Nirmala Sitharaman said, while sharing details about the Cabinet meeting.
Once the Bill becomes law, it will provide immediate relief to thousands of depositors, who had their money parked in stressed lenders such as PMC Bank and other small cooperative banks.
As per the current provisions, the deposit insurance of up to Rs 5 lakh comes into play when the licence of a bank is cancelled and the liquidation process starts.
DICGC, a wholly-owned subsidiary of the Reserve Bank of India, provides insurance cover on bank deposits.